An important change came into effect on 6th April 2020 which will affect everyone who makes a sale or gift of UK residential property, other than their own main residence, on or after that date. This change may have got lost in the fog surrounding the impact of the coronavirus, and the fact that there are fewer property sales progressing to completion at this time..
If you sell or gift UK residential property on which main residence relief is not available, a return will need to be submitted to HMRC, and the Capital Gains Tax (CGT) paid, within 30 days of the completion date for the sale. Penalties for late submission will be applied if the deadline is missed, and interest will be charged on late payment. This change affects both UK landlords and non-resident landlords, although non-resident landlords have been have been subject to the 30 day reporting rule since 2015.
If there is a loss, or a no gain/no loss situation, a return will not need to be made.
It remains to be seen whether solicitors will make the return, and retain the money to pay the CGT, but it is likely that they will need to liaise with accountants/tax advisers over the calculation over the gain, so that any available reliefs can be considered. We are not only keen to help all our clients make the reports on time, but would encourage potential sellers to contact us before a sale takes place to make sure that the sale is being organised in the most tax-efficient way.
In addition to the report mentioned above, the gain will still need to be reported on the taxpayers Self Assessment Tax Return as well.
STOP PRESS – we have just heard that HMRC have extended an important deadline of this scheme, due to the impact of the coronavirus. There will now be no penalties for late submission of reports of properties sold in the period from 6th April 2020 to 30th June 2020 provided the reports are submitted by 31st July 2020. Interest will still be charged on the late payment of CGT if it is not paid within the 30 day deadline though!